Fundstrat's Tom Lee Says Economists Predicting A Recession With Certainty Are 'Dead Wrong': 'In My 30 Years, I've Never Seen...'

Tom Lee, co-founder and research head at Fundstrat Global Advisors, expressed optimism about the current market scenario, notwithstanding the recent volatility.

What Happened: Lee identified key indicators suggesting that the worst market decline may have passed and predicted a significant upside for stocks by 2026. On the Global Money Talk podcast on Tuesday, he emphasized that the recovery of 50% of the market’s losses, which took place the previous Friday, is a strong indication that the market may have reached its lowest point.

He also observed that the high-yield bond market, a leading indicator for equities, has recovered 50% of its losses, further reinforcing the possibility of a stock market rebound. Lee advised investors to steer clear of decisions based on daily news cycles and instead concentrate on the potential for 2026 earnings to surpass expectations.

Despite the ongoing tariff war, Lee is confident that the U.S.’s potential for upside in exports, deregulation, and tax policy incentives could propel earnings growth and price-to-earnings (P/E) multiple expansion, creating a favorable environment for stocks.

Lee also mentioned that a trade-related recession is already in progress, but it is unlikely to instigate a full-blown U.S. recession unless paired with a significant shock. He dismissed the calls for a full-blown imminent recession and stated, “..for someone to be so confident that we're going to have a recession, I think they're dead wrong.” He also notes that many economists frequently struggle to accurately identify when recessions are actually occurring. “In my 30 years, I've never seen an economist get the recession right,” added Lee.

He keeps a close eye on the high-yield bond market, where spreads currently sit at 367 basis points—well below the 1,000 basis points that typically indicate an imminent recession. Lee also highlighted the $7 trillion in cash sitting on the sidelines.

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Why It Matters: Lee’s optimism comes after he previously underestimated the impact of tariffs on the market, which he likened to a “heart attack” for both the stock market and the broader economy. He predicted a V-shaped recovery and later urged Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick to expedite trade deals for a positive “policy shock” to the stock markets.

Lee’s current outlook aligns with major brokerages such as Goldman Sachs, Barclays and J.P. Morgan, who have revised their U.S. recession forecasts following a 90-day tariff truce between the U.S. and China. Meanwhile, analysts like Jim Cramer believe that a “steady drip of trade deals” is essential for strengthening the market and easing recession concerns.

Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) soared more than 13%, while SPDR S&P 500 ETF Trust (NYSE:SPY) surged 9.30% over the past month.

• READ MORE: Charlie Munger Was Once Asked Why Warren Buffett Was So Much Richer — He Replied, ‘He Got An Earlier Start,’ Then Added, ‘Why Was Albert Einstein Poorer Than I Was?’ – Benzinga

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.